(Bloomberg) - Preferred and common stock of Fannie Mae and Freddie Mac (FMCC) soared after four Senators proposed legislation related to the mortgage financiers that were placed into government conservatorships in September 2008.
Fannie Mae's (FNMA) 8.25 percent preferred shares climbed to $2.96 as of 4:15 p.m. in New York from $2.08 on March 13, reaching the highest since the month of its bailout, when the dividends were suspended. The Washington-based company’s common stock (FNMA) rose to 40 cents, the highest since May 2011, from 29.2 cents.
The securities may be worthless unless the companies can pay off the funds they owe to taxpayers or see their bailouts reworked. Lawmakers including Tennessee Republican Bob Corker and Mark Warner, a Virginia Democrat, yesterday introduced a bill that would prohibit increases in the firms’ mortgage- guarantee fees to pay for other government spending, as well as ban sales of senior-ranking U.S. Treasury-owned preferred shares without congressional approval.
“It’s not clear why” the “Treasury would sell the preferred or why anyone would want to own it,” Jim Vogel, an analyst at FTN Financial in Memphis, Tennessee, wrote in a note to clients.